Artificial intelligence gets a lot of hype — and it’s easy to see why investors are excited. Goldman Sachs estimates that generative AI in particular will drive nearly $7 trillion in global economic growth over the next decade, with a total addressable market (TAM) of $150 billion. Tech giants like Microsoft, with its AI-powered Bing search engine, and Alphabet-owned Google, with its Bard platform, are among the most obvious beneficiaries. Nvidia is another top pick on Wall Street, with the chipmaker considered the “Grand Marshal” of the AI parade. But the applications of AI go beyond search engines and cloud computing. Bernstein, for example, said it believes the world is witnessing an “exciting turn” in the adoption of AI in manufacturing. Stock picks In a March 28 note, Bernstein analyst Jay Huang named a number of stock picks with “outperform” ratings to capitalize on the AI opportunity in manufacturing, including Japanese electronics company Keyence. And he’s not the only one optimistic about Keyence. About 83% of analysts covering the stock give it a buy rating, giving it an average upside potential of 10.7%. Other stocks that made it onto his list include US-based Cognex, Estun Automation, and Hangzhou Hikvision Digital Technology. AI in Manufacturing: 3 Big Areas In a report last year, Bernstein analyst Jay Huang estimated that the total addressable market for artificial intelligence in manufacturing will grow 10-fold in five years and reach $11 billion in 2025 . Huang confirmed that he stood by his estimates in an email to CNBC Pro on Wednesday. The bank identified three areas where AI is used in the manufacturing process: machine vision, robotic guidance and industrial software. AI-assisted industrial image processing greatly expands the scope of automated inspection – according to Huang, costs and inspection times can be reduced by more than 90% compared to manual inspection. The payback period for the expense is also short – typically less than a year. And AI robotic guidance systems improve assembly speed in automobile production lines, leading to a 60% to 70% cost reduction, according to Huang’s estimates. He said he believes these manufacturing applications are picking up the pace and are on track for rapid adoption. “The entire field is in the early stages of mass adoption, with some players moving faster. The bird’s eye view is important: At such an early stage, all players are working together instead of competing – together, they are pushing the technological frontiers and contributing to critical mass of adoption, all players benefit from the creation of the new TAM,” Huang wrote on March 28. March in a separate note. – CNBC’s Michael Bloom and Pia Singh contributed to this report.
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